Taxes and Health Insurance

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Confused about how your health insurance affects your taxes? You’re not alone. Because the Affordable Care Act is still fairly new, many are not familiar with all the rules and regulations. Here is the information you need to know.

Acceptable Types of Coverage

Any insurance purchased through the Health Insurance Marketplace

“Grandfathered” individual plans from March 23rd, 2010 or earlier

Job based plans

Medicare part A or B

Medicaid, except for limited coverage plans

Children’s Health Insurance Program (CHIP)

Coverage under a parent's plan

Most student health plans

Peace Corps volunteer coverage

Some types of veteran health coverage

Most Tricare plans

Department of Defense Nonappropriated fund health benefits program

Refugee Medical Assistance

State High Risk pools for plans or policy years that started on or before December 31st, 2014

Unacceptable Types of Coverage

Vision or dental only

Workers compensation

Coverage for only a specific disease or condition

Medical service discount plans

Penalties

Higher of

$325 or

2%

Penalty will go up to $695 or 2.5% for 2016 taxes

If you did not have coverage for only part of the year, the penalty is 1/12 of the annual amount for each month you were not covered

Tax Payment Exemptions

Uninsured for less than three months

Lowest priced coverage costs more than 8% of your income

You don’t need to file because of low income

Your (recognized) religion objects to insurance

You are in a recognized health sharing ministry

You are Native American and eligible for services through an Indian Health Services provider

You are not a U.S citizen, U.S national, or lawfully present alien

You are incarcerated

Hardship Exemptions

Filed for bankruptcy in the last six months

Were homeless

Had medical expenses you could not pay in the last 2 years

Are a recent victim of domestic violence

Had an individual plan cancelled and could not afford other Marketplace plans

Suffered from a fire, flood, or other natural or human caused disaster that substantially damaged your property

Tax season ends on April 18th, 2016 so make sure to get yours done in time. To avoid paying penalties on 2016 taxes, check to see if you qualify for a special enrollment.